Working Together: A Government of Canada/Voluntary Sector Joint Initiative - Report of the Joint Tables

Supplementary Paper D: Analysis of Returns of Registered Charities (1995 Filing Period)

Charities Division, Policy and Legislation Branch, Revenue Canada

Preface

The data used to develop this analysis was taken from the Charities Assessing and Registration (CARE) database system. The raw data acquired was consolidated into an MS Access database. From Access, the numbers were further manipulated by downloading and compiling the appropriate groups of data into MS Excel spreadsheets. The numbers were grouped by charitable organization category codes, and grant recipients versus non-grant recipients. For those wishing to perform more detailed analysis, the following documents are available as e-files in MS Excel:

• Detail Tables: Total Receipts (for charities with and without grants and payments)
• Detail Tables: Tax-Receipted Income (for charities with and without grants and payments)
• Detail Tables: Grants or Payments (for charities reporting grants and payments)
• Comparison Table: Grants/Payments Recipients versus Non-Recipients

• Charities(1) receiving Federal, Provincial or Municipal Grants or Payments:
  -  by General Category Heading; - by Dollar Range of Receipts; - by Designation
• Charities(2) NOT receiving Federal, Provincial or Municipal Grants or Payments:
  -  by General Category Heading; - by Dollar Range of Receipts; - by Designation

• Charities receiving Federal, Provincial or Municipal Grants or Payments:
  - by General Category Heading; - by Dollar Range of Receipted Income
• Charities NOT receiving Federal, Provincial or Municipal Grants or Payments:
  - by General Category Heading; - by Dollar Range of Receipted Income

• Charities receiving Federal, Provincial or Municipal Grants or Payments:
  - by General Category Heading; - by Dollar Range of Grants or Payments
• Charities NOT receiving Federal, Provincial or Municipal Grants or Payments:
  - by General Category Heading

• Charities(3) receiving Federal, Provincial or Municipal Grants or Payments:
  - by General Category Heading; - by Dollar Range of Receipts; - by Designation
• Charities(4) NOT receiving Federal, Provincial or Municipal Grants or Payments:
  - by General Category Heading; - by Dollar Range of Receipts; - by Designation

• Charities receiving Federal, Provincial or Municipal Grants or Payments:
  - by General Category Heading; - by Dollar Range of Receipted Income
• Charities NOT receiving Federal, Provincial or Municipal Grants or Payments:
  - by General Category Heading; - by Dollar Range of Receipted Income

• Charities receiving Federal, Provincial or Municipal Grants or Payments:
  - by General Category Heading; - by Dollar Range of Grants or Payments
• Charities NOT receiving Federal, Provincial or Municipal Grants or Payments:
  - by General Category Heading

1. Introduction

As part of the voluntary sector-government joint tables process on Improving the Regulatory Framework, the Charities Division, Revenue Canada, was asked to participate in a project involving an analysis of federal funding of voluntary sector groups. The specific task assigned to the Charities Division was to provide a report on Revenue Canada's register of charities. The data was taken from 1995 Registered Charity Information and Public Information Returns (Form T3010), using the Charities Assessing and Registration (CARE) database system.

The report looks at three specific areas from the T3010 return:

1. Total receipts (line 109);
2. Tax-receipted income (line 100); and
3. Federal, provincial and municipal grants and payments (line 103).

A comparison is also made between charities that receive grants or payments and those that do not.

2. Assumptions and Limitations

• 1995 Data

Keying of 1997 T3010 information returns has yet to be finalized and therefore, the last complete year of available information was 1996. As the Charities Division is still involved in a review of 1996 data and the only change from the 1995 return related to questions concerning remuneration of directors, it was decided to focus the analysis on 1995 data.

It is also important to note that separate identification of federal, provincial and municipal funding was not introduced until 1997. Both 1995 and 1996 returns only identify "total" government grants and payments received.

• Reliability Issues with T3010 Data

In a 1994 study of the voluntary sector by the Canadian Centre for Philanthropy, reliability issues were raised with the 1991 T3010 data file. The issues ranged from charities that simply did not report financial figures, errors of arithmetic, and reporting of financial figures that were obviously too low. This latter problem related to situations where registered charities reported their finances in thousands of dollars and failed to indicate the last three zeros on their forms (e.g., $400,000 was reported as $400). In the case of universities, revenue figures from T3010 returns were compared against data published by the Association of Universities and Colleges of Canada. In a review of 51 Canadian universities, 15 (30%) were found to have been affected by the three zeroes ($000) problem. Once corrected, the new total revenue figure for universities was approximately two times higher than the original, uncorrected T3010 figure had been.

In considering the 1995 T3010 data file, T3010 returns for the majority of Canadian universities and a number of hospitals were manually reviewed against information in the CARE system. Where the ($000) problem was identified, the data was corrected. However, it is possible that similar errors may exist for other categories of charity. In terms of potential problems with charities not reporting financial information or arithmetic errors, a definitive statement on accuracy cannot be provided since only those charities that were subject to departmental audit would have had complete validity checks on the information reported in their T3010 returns.

The Charities Division continues to review the 1995 T3010 information and makes corrections to the data as errors are uncovered.

• Financial Distribution

In selecting the financial categories to be used in the analysis of the T3010 data, an attempt was made to ensure a fairly broad range of distribution (subject to time and resource constraints). A number of entries of $100 or less were reviewed to ensure that there had not been keying errors. The $30,000 threshold was introduced for consistency with the cut-off range identified in the 1997 revision of the T3010 return which exempted charities with total receipts of $30,000 or less from completing Section E "Further Information on Amounts Received".

• Negative Values

In a small number of cases, charities reported "negative" grants and/or receipts. These instances have been noted and netted in the tables but no attempt has been made to further explain why a charity may have reported a negative value.

• Number of Returns vs. Number of Charities

In a small number of instances, charities may have sent in two T3010 returns for the same fiscal period. This could have occurred as a result of a change in fiscal period or the filing of an amendment to information previously reported.

• Registered Canadian Amateur Athletic Associations (RCAAA)

Unlike registered charities, RCAAAs do not file the T3010 public information return. They instead are required to file form T2052 Registered Canadian Amateur Athletic Association Return of Information. The only financial data requested on the return is the total amount for which the association issued official donation receipts in the fiscal period. While this information is not data-captured, in early 1999 the Charities Division conducted a manual review of the1996 return and determined that 115 RCAAAs had reported $14,585,851 in official donation receipts.

• Registered National Arts Service Organizations (RNASOs)

RNASOs are not registered charities, however, they are required to file the T3010 information return and therefore are included in the totals. They appear in the report under category code 81.

3. Definitions

Registered charity refers to those entities that have applied and been registered with Revenue Canada for income tax purposes.

Categories refers generally to the 47 subject headings used to classify charities that are registered with Revenue Canada. For the purpose of this analysis, hospitals and universities have been segregated from the other subcategories within Health and Education. Universities and Hospitals are not only the primary recipients of government grants and payments, they also tend to be largely stand-alone entities, closely regulated outside the auspices of the registered charity requirements of the Income Tax Act.

It should also be noted that the 1997 revision of the T3010 return introduced a requirement to identify the top four categories or fields that a charity was active in during the fiscal period. The selection is made from a pick-list of 68 fields falling within the general headings of social services in Canada, international aid and development, education and research, culture and the arts, religion, health, environment, and other community benefits. The information will be data-captured and updated annually.

Federal, provincial or municipal grants and payments received (Line 103 in the 1995 and 1996 versions of the Registered Charity Information and Public Information Return). In the associated Guide to the information return, charities are asked to report the total of all grants or payments received from any level of government or government agency for the fiscal period covered by the return. They are further advised to include only those amounts actually received and not to include amounts promised to the charity.

Receipted income (Line 100) refers to total gifts received for which the charity issued "official receipts" for income tax purposes.

Total receipts (Line 109) is the sum of receipts from gifts (including gifts received for which the charity issued "official receipts", gifts from other registered charities and gifts received for which the charity did not issue "official receipts") and receipts from other sources (including federal, provincial or municipal grants and payments received, investment and property income, net realized capital gains (losses), income from any related business, membership and subscription fees, and "other income").

4. Information Return/Data Capture

A registered charity must file a T3010 information return each year within six months of its fiscal period end. In 1995 and 1996, the return consisted of four pages of public information and associated schedules. Once received by the Department, the returns are keyed into the CARE mainframe database by the Ottawa Taxation Centre.

5. Analysis

• There were a total of 68,025 returns (T3010's) filed by registered charities. Charities not receiving government grants or payments made up 67% of this total, while charities receiving government grants/payments made up 33%.
• On average, a charity not receiving government grants or payments reported 24% less (5) in receipted income than a charity receiving government grants or payments. (As a group, charities not receiving government grants or payments reported 35% more in receipted income than charities receiving grants or payments.)
• On average, a charity receiving government grants or payments had almost twelve times as much in total receipts than charities which did not have such payments.(6) (As a group, charities receiving government grants or payments reported 82% more in total receipts.)
• Within the 47 Revenue Canada categories of registered charities, 10 categories(7) accounted for 97% of all grants and payments reported.
• Charities in the "Hospitals" and "Teaching Institutes" categories, which made up approximately 10% of charities reporting government grants or payments (and 5% of all charities), led all categories in terms of funding received.
• Even though charities classified under "Religion" consisted of the largest group, i.e. 43% of all charities, this group accounted for only 9.6% of overall total receipts for charities receiving government grants/payments or not.
• In a recent review of returns for the 1996 fiscal period, 115 RCAAAs were reporting $14,585,851 in official donation receipts.

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(1)  Data are for 22,437 charities which reported receiving Federal, Provincial or Municipal grants or payments.